Stock Based Compensation Plans
 6 Months Ended
Apr. 30, 2013
Stock Based Compensation Plans Disclosure [Abstract]  
Stock-Based Compensation Plans

12. Stock-Based Compensation Plans

 

The Company recognized total compensation cost related to its stock-based compensation plans as follows:

   Three Months Ended  Six Months Ended
   April 30,  April 30,
(in thousands)  2013 2012  2013 2012
2008 Plan:          
Stock options $ 3,677$ 6,260 $ 7,525$ 15,443
Restricted shares   8,008  5,892   16,437  12,007
Phantom stock units   129  69   273  124
Employee Stock Purchase Plan   -  -   376  108
Incentive Plan – Stock Alternative   2  -   198  126
Atlanta Capital Plan   352  232   703  463
Parametric Plan   822  594   1,645  1,173
Total stock-based compensation expense $ 12,990$ 13,047 $ 27,157$ 29,444

The total income tax benefit recognized for stock-based compensation arrangements was $5.0 million and $4.0 million for the three months ended April 30, 2013 and 2012, respectively, and $10.5 million and $9.2 million for the six months ended April 30, 2013 and 2012, respectively.

 

2008 Omnibus Incentive Plan (“2008 Plan”)

The 2008 Plan, which is administered by the Compensation Committee of the Board, allows for awards of stock options, restricted shares and phantom stock units to eligible employees and non-employee Directors. A total of 19.8 million shares of Non-Voting Common Stock have been reserved for issuance under the 2008 Plan. Through April 30, 2013, 6.0 million restricted shares and options to purchase 14.5 million shares have been issued pursuant to the 2008 Plan.

 

Stock Options

 

The fair value of each stock option award is estimated on the date of grant using the Black-Scholes option valuation model. The Black-Scholes option valuation model incorporates assumptions as to dividend yield, volatility, an appropriate risk-free interest rate and the expected life of the option. Many of these assumptions require management's judgment. The Company's stock volatility assumption is based upon its historical stock price fluctuations. The Company uses historical data to estimate option forfeiture rates and the expected term of options granted. The risk-free rate for periods within the contractual life of the option is based on the U.S. Treasury yield curve at the time of grant.

 

The weighted-average fair value per share of stock options granted during the six months ended April 30, 2013 and 2012 using the Black-Scholes option pricing model were as follows:

   20132012
 Weighted-average grant date fair value  
  of options granted$7.68$6.68
     
 Assumptions:  
 Dividend yield2.8% to 5.5%2.9% to 3.1%
 Volatility36%36%
 Risk-free interest rate1.2% to 1.3%1.5%
 Expected life of options7.1 years7.2 years
     

Stock option transactions under the 2008 Plan and predecessor plans for the six months ended April 30, 2013 are summarized in the below table.

(share and intrinsic value figures in thousands)Shares Weighted-Average Exercise PriceWeighted-Average Remaining Contractual Term (in years) Aggregate Intrinsic Value 
Options outstanding, beginning of period 27,653 $ 26.90    
Granted 2,251   28.31    
Exercised (4,207)   20.97    
Forfeited/expired (207)   29.96    
Options outstanding, end of period 25,490 $ 27.98 5.1$ 324,971 
Options exercisable, end of period 16,601 $ 28.77 3.6$ 206,028 
Vested or expected to vest 25,135 $ 28.00 5.1$ 320,213 

The number of shares subject to option and the weighted-average exercise price of options reflected in the table above have been adjusted pursuant to certain anti-dilution provisions of the Company's 2008 Plan and predecessor plans to reflect the effect of a $1.00 per share special dividend declared and paid in December 2012.

 

The Company received $83.5 million and $8.2 million related to the exercise of options for the six months ended April 30, 2013 and 2012, respectively. Options exercised represent newly issued shares. The total intrinsic value of options exercised during the six months ended April 30, 2013 and 2012 was $56.6 million and $5.0 million, respectively. The total fair value of options that vested during the six months ended April 30, 2013 was $28.0 million.

 

As of April 30, 2013, there was $35.0 million of compensation cost related to unvested stock options granted not yet recognized. That cost is expected to be recognized over a weighted-average period of 3.3 years.

Restricted Shares

Compensation expense related to restricted share grants is recorded over the forfeiture period of the restricted shares, as they are contingently forfeitable. As of April 30, 2013, there was $84.8 million of compensation cost related to unvested awards not yet recognized. That cost is expected to be recognized over a weighted-average period of 3.4 years.

 

A summary of the Company's restricted share activity for the six months ended April 30, 2013 under the 2008 Plan and predecessor plans is summarized in the below table:

     Weighted-
     Average
     Grant
     Date Fair
  (share figures in thousands)Shares Value
  Unvested, beginning of period 3,233 $ 26.43
  Granted 1,601   29.11
  Vested (756)   26.29
  Forfeited (103)   28.15
  Unvested, end of period 3,975 $ 27.53

The total fair value of restricted stock that vested during the six months ended April 30, 2013 and 2012 was $19.9 million and $12.2 million, respectively.

Phantom Stock Units

In the six months ended April 30, 2013, 9,465 phantom stock units were issued to non-employee Directors pursuant to the 2008 Plan. Because these units are contingently forfeitable, compensation expense is recorded over the forfeiture period. The total liability paid out associated with phantom stock during the six months ended April 30, 2013 and 2012 was $0.3 million and $0.2 million, respectively. As of April 30, 2013, there was $0.4 million of compensation cost related to unvested awards not yet recognized. That cost is expected to be recognized over a weighted-average period of 1.2 years